The Government of the Republic of the Philippines Bangko Sentral ng Pilipinas

Financial Literacy Campaign

for Overseas Filipinos and Families

28 June 2007

Mayfair Plaza, Bacolod CityBangko Sentral ng Pilipinas

Leveraging Leveraging Remittances for Remittances for DevelopmentDevelopment

The Government of the Republic of the Philippines Bangko Sentral ng Pilipinas

Trends in Trends in

Remittances of Remittances of

Overseas FilipinosOverseas Filipinos

Increased demand for Increased demand for Filipino workers Filipino workers

Better capture of Better capture of remittances by local remittances by local commercial bankscommercial banks

OFW Remittances (in US$ billion) */OFW Remittances (in US$ billion) */

OFW remittances sustain growthOFW remittances sustain growth

0

5

10

15

2002 2003 2004 2005 2006 J-Apr 06

J-Apr 07

0

5

10

15

20

25

30Growth Rate (RHS)

*/ Based on bank reports*/ Based on bank reports

LevelLevel(in US$ Bil)(in US$ Bil)

1/1/

GrowtGrowth h

RateRate(%)(%)

Remittances as % of:Remittances as % of:

GDPGDP XGSXGS FDIFDI GIRGIR DSBDSB

2000 6.05 -10.9 8.0 14.9 270.1 40.2 96.6

2001 6.03 -0.3 8.5 17.5 3092.8 38.4 92.4

2002 6.89 14.2 9.0 18.2 446.6 42.1 88.7

2003 7.58 10.1 9.5 19.6 1543.4 44.4 95.3

2004 8.55 12.8 9.9 20.0 1242.7 51.7 118.5

2005 10.69 25.0 10.9 23.9 576.5 57.8 142.2

2006 12.76 19.4 10.9 24.7 544.2 55.6 161.5

2007 4.68(J-Apr.)

26.1 11.1(J-Mar.)

25.8(J-Mar.)

491.6(J-Mar.)

18.7(Apr)

165.9(J-Mar.)1/ Cash remittances coursed through the banks

OF REMITTANCES OF REMITTANCES

44

The Government of the Republic of the Philippines Bangko Sentral ng Pilipinas

Macro Economic Macro Economic Benefits ofBenefits of

RemittancesRemittances

Macroeconomic Benefits of Macroeconomic Benefits of RemittancesRemittances

provide FX supply healthy BOP, strong GIR

stabilize exchange rate stable price

stimulate consumption production activity

The Government of the Republic of the Philippines Bangko Sentral ng Pilipinas

Harnessing Harnessing

RemittancesRemittances

for Developmentfor Development

The Government of the Republic of the Philippines Bangko Sentral ng Pilipinas

Remittances can be harnessed for investments, in the form of:

human resource capital investments through education and health care for beneficiaries;

physical capital investments through acquisition of real properties, including land purchases and home construction;

financial capital investments through savings in bonds and other financial instruments; and

investments in business ventures such as in small- and micro- enterprises (SMEs).

BSP initiatives to improve the remittance environmentBSP initiatives to improve the remittance environment

Enhance transparency and promote competition in the Enhance transparency and promote competition in the remittance market remittance market

Posting of remittance charges;Posting of remittance charges;

OFW portal (www.bsp.gov.ph)OFW portal (www.bsp.gov.ph)

Improve the country’s payments and settlements system Improve the country’s payments and settlements system (e.g., interconnection of three major ATM Network, (e.g., interconnection of three major ATM Network, alternative modes of remittances)alternative modes of remittances)

Improve access to financial services (e.g., simplification of Improve access to financial services (e.g., simplification of Identification of bank clientele)Identification of bank clientele)

encouraging OFWs and their families to increase savings encouraging OFWs and their families to increase savings and investments; andand investments; and

promoting advocacy programs to cultivate financial promoting advocacy programs to cultivate financial literacy among OFWs and their familiesliteracy among OFWs and their families (e.g., FLCs)(e.g., FLCs)

PESO REMITTANCEPESO REMITTANCE

CONSUMPTIONCONSUMPTION SAVINGSSAVINGS SMEs/MICROFINANCESMEs/MICROFINANCE

Bank instruments (TD/SD/Bank instruments (TD/SD/Mutual funds/UITF)Mutual funds/UITF)

P5,000 up P5,000 up

Savings in CooperativesSavings in CooperativesTD/SDTD/SD

P5,000 upP5,000 up

Treasury instrumentsTreasury instrumentsT-bills, T-notesT-bills, T-notesP100,000 upP100,000 up

Stock MarketStock Market

Insurance (life, non-life,Insurance (life, non-life,Education, pension)Education, pension) Real EstateReal Estate

OthersOthers

Agri-businessAgri-business

Retail businessRetail business

Lending businessLending business

OthersOthers

1111

Survey of Remittance ChargesSurvey of Remittance Charges(in US $, including FX mark-up)

Source of Remittance USA United Kingdom Singapore

Ave. Amt. of Remittance per transaction 400 600 200

  2000 2006 2000 2006 2000 2006

1. Credit to Account (Own Bank) 8.00-12.00 7.09-11.59 9.48-13.96 7.85-11.73 3.82 2.94-3.76

2. Credit Other Local Bank 8.00-17.00 10.09-14.59 10.97-18.74 9.70-13.58 3.82 2.94-3.80

3. Door-to-Door:            

Metro Manila 14.00-17.00 12.09-14.59 13.96-23.53 9.70-15.42 6.71 4.40-6.79

Provinces 16.00-19.00 14.09-17.59 13.96-23.53 9.70-17.27 9.60 4.99-9.82

4. Advice and Pay * 8.00-16.00 8.09-14.18 10.97-18.74 7.71-15.42 3.82 3.76-4.76

*The bank notifies the beneficiary of the remittance by phone; the beneficiary picks up the remittance from the nearest branch.

Website:Website:www.bsp.gov.phwww.bsp.gov.phE-mail:E-mail:bspmail@bsp.gov.phbspmail@bsp.gov.ph